BAA PLC - Final Results.

                                 Embargoed until 0700 hours Tuesday 17 May 2005 
 
 
 
                 BAA RESULTS FOR THE YEAR ENDED 31 MARCH 2005 
 
                    BAA REPORTS STRONG OVERALL PERFORMANCE 
 
 
 
Performance for the year 
 
 
 
* Group revenue up 7.4% to A[pounds sterling]2,115 million (2004: A[pounds sterling]1,970 million). 
 
* Group operating profit up 9.1% to A[pounds sterling]672 million (A[pounds sterling]616 million). 
 
* Profit before tax up 36.0% to A[pounds sterling]733 million (A[pounds sterling]539 million). 
 
* Earnings per share up 43.7% to 51.0 pence (35.5 pence). 
 
* Dividend per share up 6.0% to 21.2 pence (20.0 pence). 
 
 
 
Underlying performance for the year 
 
 
 
* Group operating profit before exceptional items up 11.7% to A[pounds sterling]688 million (A[pounds sterling]616 
million). 
 
* Profit before tax and exceptional items up 18.8% to A[pounds sterling]637 million (A[pounds sterling]536 million). 
 
* Underlying earnings per share up 18.7% to 41.9 pence (35.3 pence). 
 
 
 
Summary business performance for the year 
 
 
 
* Passenger traffic up 6.3% to a record 141.7 million (133.4 million) - up 9.7% 
in first quarter, 5.7% in second quarter, 4.3% in third quarter, and 5.4% in 
final quarter. 
 
* Net retail income up 7.3% to A[pounds sterling]588 million (A[pounds sterling]548 million) and net retail income 
per passenger increased 1.0% to A[pounds sterling]4.16 (A[pounds sterling]4.12). 
 
* Property transactions realised A[pounds sterling]625 million net cash proceeds and A[pounds sterling]112 million 
exceptional profit(pre-tax). 
 
* A[pounds sterling]16 million exceptional reorganisation costs to improve customer focus and 
operational effectiveness and efficiency. 
 
* Capital expenditure A[pounds sterling]1,403 million (A[pounds sterling]1,318 million), including A[pounds sterling]773 million (A[pounds sterling] 
724 million) on Terminal 5, which remained ahead of schedule and on budget. 
 
* Net debt A[pounds sterling]3,080 million (A[pounds sterling]2,770 million) and gearing 56% (56%). 
 
 
 
Mike Clasper, Chief Executive Officer of BAA commented: 
 
"BAA has delivered another good set of results. Great retail performance, in 
spite of adverse conditions, smart use and development of assets and improved 
customer service, all supported by a strong focus on innovation, have driven 
our operational performance.  At the same time we have also delivered an 
exceptional property related profit of A[pounds sterling]112 million thanks to our property 
management and transaction skills, which enabled us to create the Airport 
Property Partnership with Morley Fund Management.  All these attributes give me 
confidence that we can sustain growth and translate our forecast rise in 
Londonpassenger traffic of 3.5% into a robust financial performance for 2005/ 
06." 
 
 
 
A presentation and webcast of BAA's results will take place at 9.30 am today at 
Bloomberg, City Gate House, 39-45 Finsbury Square, London EC2A 1PQ. 
 
 
A pre-recorded interview with BAA's Chief Executive Officer, Mike Clasper, is 
available from 7.30 am today on BAA's website - www.baa.com/investor. 
 
Media enquiries:    Duncan Bonfield 
 
                    Tel +44 (0)20 7932 6654 
 
 
 
Investor enquiries: Sarah Hunter 
 
                    Tel +44 (0)20 7932 6692 
 
 
 
 
SUMMARY OF RESULTS 
 
                                            Year ended      Year ended  Change 
                                         31 March 2005   31 March 2004       % 
 
Passenger traffic                               141.7m          133.4m     6.3 
 
Group revenue1                                 A[pounds sterling]2,115m         A[pounds sterling]1,970m     7.4 
 
Group operating profit1,2                        A[pounds sterling]672m           A[pounds sterling]616m     9.1 
 
Profit before tax2,3                             A[pounds sterling]733m           A[pounds sterling]539m    36.0 
 
Earnings per share2,3                            51.0p           35.5p    43.7 
 
Dividend per share                               21.2p           20.0p     6.0 
 
Net retail income4                               A[pounds sterling]588m           A[pounds sterling]548m     7.3 
 
Net retail income per passenger5                 A[pounds sterling]4.16           A[pounds sterling]4.12     1.0 
 
Capital expenditure                            A[pounds sterling]1,403m         A[pounds sterling]1,318m     6.5 
 
 
 
 
1  excludes associates and joint ventures. 
 
2   stated after A[pounds sterling]16 million (A[pounds sterling]nil) exceptional reorganisation costs. 
 
3    stated after A[pounds sterling]96 million (A[pounds sterling]3 million) net exceptional profit (before tax). 
 
4  defined as revenues received directly from third party retail operators, 
concession fee paid to UK airports by World Duty Free (WDF) and WDF's operating 
profit - see note 12 of the attached financial statement. 
 
5  defined as net retail income divided by number of passengers (excluding 
helicopter passengers) - see note 12. 
 
 
 
OPERATING AND FINANCIAL REVIEW 
 
 
 
Operating review 
 
 
 
Passenger numbers rose 6.3%, with first half growth of 7.5% reflecting the 
recovery from the Gulf War and SARS in 2003/04.  Aeronautical yields increased 
6.4%.  Net retail income per passenger grew 1%, despite a background of 
extremely challenging external conditions.  An improved focus on service 
quality and operational effectiveness kept the rise in the business's 
underlying cost base to 5.4%. 
 
 
 
The results for the year also reflect a net exceptional profit before tax of 
A[pounds sterling]96 million, comprising A[pounds sterling]112 million profit from property disposals (primarily 
the result of the creation of the Airport Property Partnership (APP), a joint 
venture with Morley Fund Management) less A[pounds sterling]16 million reorganisation costs 
(related to the change in the Group's operating model). 
 
 
 
Year of innovation and growth 
 
During the year BAA innovated across all aspects of the business to accommodate 
the record number of passengers, increase commercial revenues and control 
costs. 
 
 
 
Passenger traffic at BAA's UK airports grew 6.3% to a record 141.7 million 
passengers, with good growth achieved at all seven airports.  At Heathrow, 
passenger traffic grew 5.3% to 67.7 million as pilot schemes to improve 
check-in and security screening were introduced, resulting in improved customer 
experience and travellers with more airside shopping time and a greater 
propensity to purchase before boarding. 
 
 
 
Gatwick's passenger traffic was up 6.5% to 32.0 million, above the 
pre-September 11 2001 level for the first time.  At Stansted, passenger traffic 
was up 9.1% to 21.2 million as a result of the introduction of new routes.  The 
three Scottish airports saw passenger growth of 6.0% to 19.3 million 
passengers, with an increasing number of long haul routes being offered from 
Glasgow and Edinburgh and growth in the domestic and European markets out of 
Aberdeen.  Southampton grew a further 12.9% to 1.5 million passengers, as its 
route network continued to grow. 
 
 
 
To accommodate the increasing demand, the Group has continued to build new 
facilities at all its airports.  At Heathrow, the Group is making good progress 
on the building of Terminal 5, where the project is now almost 60% complete, 
ahead of schedule and on budget.  Heathrow's management is developing plans to 
transform its existing four terminals to provide more space and improved 
facilities.  During the year, commercial agreements were signed with the Star 
Alliance and Virgin Atlantic for the redevelopment, over the next seven years, 
of Terminals 1 and 3.  Work also continued to accommodate the Airbus A380's 
arrival at Heathrow in spring 2006. 
 
 
 
Reorganisation for improved operations 
 
BAA has commenced the implementation of a significant reorganisation programme 
designed to ensure the Group improves its focus on customers and operational 
effectiveness and efficiency.  This new operating model is airport-led, which 
means devolving greater responsibility and accountability as close to the 
customer as possible. 
 
 
 
In 2004/05 BAA recognised A[pounds sterling]16 million of exceptional reorganisation costs.  A[pounds sterling]11 
million related to the implementation of change programmes in certain support 
functions (primarily finance and property) and A[pounds sterling]5 million on development of the 
wider programme.  The costs recognised to date are cash costs; the key 
components being severance, organisational design and programme development. 
Actions implemented to date will deliver estimated annual savings of some A[pounds sterling]4 
million and are essential enablers of the wider programme. Further details of 
the costs and benefits of the reorganisation will be announced as the programme 
is finalised.  The intention is that this will be no later than November 2005. 
 
 
 
Property transactions 
 
On 11 March, BAA completed a 50:50 property joint venture with Morley.  BAA 
injected certain commercial property assets into the joint venture, APP, at a 
transaction value of A[pounds sterling]793 million, for which it received net cash proceeds of A[pounds sterling] 
565 million (after A[pounds sterling]6 million of cash transaction costs) and equity shares 
worth A[pounds sterling]222 million.  The deal crystallized the value of a significant element 
of BAA's investment property portfolio, delivered cash to deploy against core 
strategies and gives the property business better access to capital and to 
Morley's complementary expertise. 
 
 
 
Financial overview 
 
 
 
Group revenue increased 7.4% to A[pounds sterling]2,115 million (A[pounds sterling]1,970 million) on passenger 
traffic ...